Marketing Case Study Paper on Marketing at IKEA Industry Furniture

Marketing at IKEA Industry Furniture


This article analyzes IKEA group, which is the world’s top dealers of furniture at retail level. The problems that faced IKEA as the furniture industry are evident when the company began in America. At first, operators of the company discovered that individuals were not interested in their products. During that time, they used to sell furniture such as kitchen cabinets, beds, and sofas, which Americans found them less attractive to fit their comfort. The reason why IKEA furniture did not meet American preferences is that their dimensions were in centimeters and not inches. As a result, these complaints from customers led to rise of problems, which decreased marketing at IKEA industry. However, in response to such issues, operators at IKEA sorted them by paying close attention to complaints they received from customers. Based on market research, IKEA were capable of addressing these issues by concentrating on their products, and merchandise to win and attract clients. In future, this company intends to expand its marketing strategy by initiating 50 stores to operate in the United States by 2013.

Situational Analysis

Environmental Analysis

The key issue that affected IKEA in marketing its furniture is that it had a limited selection when it comes to style. This occurs despite the fact that IKEA sells diverse types of furniture, but fails to satisfy the Americans preferences. The other issue that affected marketing at the company is that IKEA did not have enough sales representatives to serve their customers. In the process, they lost a lot of customers due to low number of employees. The other issue that affected marketing at the company is the fact that the market was highly fragmented in that the top 10 retailers could only account for 14.2 percent of market share. This led to a wide dichotomy between low end, and high end retailers leading to poor sales and income. In addition, customers had a negative sentiment towards their products, which did not satisfy needs of Americans because; they were outdated. (Schiff man 58). The other issue that is linked to performance of IKEA furniture industry is the homeownership rate that is sensitive in United States. This means that when plenty of customers own homes, they will be willing to purchase household goods in plenty, which incorporate furniture, hence; increase demand for furniture.

Industry Analysis

IKEA is a furniture industry that consists of diverse entities across the world with the recent, which is established in United States. It sales a wide range of furniture such as beds, sofas and kitchen cabinets that are suitable for a home setting. In addition, IKEA has also established a website to assist in marketing their products. Its goal is to have over 50 stores that will be operating in United States by 2013.

Bargaining Power of Buyers

The industry incurs poor services in relation to bargaining power of buyers because of insufficient number of employees. This follows after a lot of clients visit the IKEA stores and end up not being attended to because their ratio is higher contrasted to that of employees. As a result, customers opt to visit other furniture stores with plenty of staff who can cater for their needs.

Bargaining Power of the Supplier

At IKEA, the bargaining power of the supplier affects how this business operates. The reason is because they do not offer services or products to meet satisfaction of the clients. As a result, IKEA has improved its services by providing different types of furniture to suits variety of clients while focusing on their levels of profits and revenues. This has enabled the suppliers to increase their creativity by offering furniture that satisfies their customers. 

Threats to new entrants

IKEA industry experiences relatively low threat of new entrants in the United States. This is because of the cost as well as performance advantage of the existing firms associated with low cost and efficiency in operations. In addition, market shares and strong brand identities play vital roles in restricting new entrants into the industry. Other barriers include insurance, licenses, and qualifications of operations.

Threats of substitutes

IKEA industry suffers from a very high threat in relation to substitutes. For instance, there are many business involve in production of furniture which leads to competition. In addition, customers opt to purchase furniture that is available at the nearest store to cut on transport costs.

Rivalry among existing entities

At this company, a high rivalry exists in regard to exiting business entities within the industry aided by the fact that the industry is mature thus no longer growing at a rapid pace. In addition, there is no substantive differentiation of the products within the industry. Consumers also do not incur costs while switching from one operator to the other.


Consumer spending is a factor that affects purchase of furniture at IKEA, and is the amount, which people spend on goods and services. However, clients can only spend such funds when they are confident about stability of the economy, and availability of the disposable income. This implies that when customers are not comfortable in spending due to poor economy, it also affects the furniture industry because; they will not find it affordable to purchase them. In addition, demand from department stores has encouraged operators to allow great discount on furniture, and this trend entices consumers away from traditional furniture stores. To improve this situation, IKEA has gone a step ahead by creating an inviting atmosphere with amenities such as play rooms for children, and setting their furniture prices low, which increases their marketing.

Firm Analysis SWOT

This incorporates strengths, weakness, opportunities, and threats which has an impact to IKEA organization. Analyzing the possible solutions, there are various advantages, and disadvantages in relation to IKEA furniture industry. First are the advantages and limitations of producing products with latest trends. Personality and self concept influences the purchasing behavior of a customer. The advantage part is that if new products attract individuals with personality described by this character, they will increase sales of furniture. However, limitation is evident when potential clients lack such traits; they exhibit lack of interest hence; affects marketing. Perception affects customer’s behavior and determines whether they will purchase products on sale. Analyzing solutions to increase purchase of furniture, the advantage part is that a customer with a positive perception will end up purchasing them. However, it is a disadvantage if a client perceives the store to have a poor display, this may affect his purchasing behavior hence; decrease in sales.

Alternative Ways of Action

There also exist alternative solutions to curb problems that affect sales of furniture at IKEA. First, this industry should concentrate on market share concentration that is evidently low due to fragmentation. This is evident when only top 10 retailers could only account for 14.2 percent of market share. This implies that IKEA as a furniture industry should concentrate in its business by expanding its stores, and increasing employment levels to attract more sales.

 Availability of experienced workforce is another solution that will solve problems in this furniture industry. In this case, IKEA operators should be in a position to motivate its staff and ensure that they are capable of offering sound advice to their customers at the same time respond to their queries appropriately. The attractive presentation of product will also attract majority of customers and increase sales of furniture. In regard to this point, operators need to place clear strategies on how they can present their store layout in an attractive manner to attract customers. Furthermore, customers will be satisfied through display when they view the furniture arranged similar to a home environment to induce them to purchase. The other solution that can boost purchase of furniture is when operators upgrade to the latest trend of fashion and style. This implies that the IKEA should produce furniture that is favored by the current market to be in the same level with the changing preferences of customers.

To increase sales of furniture, suppliers should have a clear position of their market, which will assist them to portray a clear image of the company. This implies that for IKEA Company to increase its sales, potential clients require having details about the type of products, which the company offers, and their target market. It is also vital for a furniture industry to initiate brand names that customers can relate with to meet their expectations. This is because; majorities tend to buy items that they can familiarize with. Proximity to key markets will also solve the problem when stores are easily accessible; it maximizes exposure to prospective buyers. For instance, operators may locate their stores in areas with plenty of homeowners or where there is traffic for display (Schiff man 59).

Contrasting the alternative solutions, it is evident that all of them play a significant role of increasing sales in furniture industry. This is because the solutions rely on each other to determine the prosperity of a sales industry. For instance, despite proximity to key markets, there is need of experienced staff for efficient marketing of products.

Evaluation of Alternatives and Recommendation

From the case, the best solution that suits IKEA is when its operators lay strategy to ensure that their market positions are clear, and proximal to potential clients. I recommend this action because; through it, operators will be working on portraying a clear image of their company. By doing this, they will be marketing themselves by creating awareness of their furniture to customers. This will also benefit IKEA as a furniture industry because; they will be in a position to discover their own target market. This is the most appropriate solution in that locating stores to areas that are accessible by customers convince them to purchase the furniture, and reduce on transport expenses.     

Works Cited

Schiff man, Leon. Consumer Behavior, 10th ed. Upper Saddle River, NJ: Pretence Hall,                            2010.